Sales Control

Sales control requires the establishment of standards, the

evaluation
of actual performance and the correction of deviation in
performance. Sales control implies not only managerial action
with regard to actual sales, but it also embraces all other
marketing
function required for the even flow of products or services form
producers to consumers.
 Objectives of Sales Control
• Performance Management: the first step in sales control is
measuring the performance of the sales force.

• Problem Identification: sales control help managers to

identify problems in sales before they become liabilities to the
firm.

• Identifying Opportunities: identifying sales opportunities

before the competitors o an thus helping the firm gain a
competitive advantage.
 Sales Control Process
 Setting Goals:
Sales Manager design the courses of action by which the sales force
can achieve the goals set.
 Comparing Actual with Targets:

the next step in sales control process comparing the actual with the
set goals.
 Taking Necessary Measures:

once the causes for the gaps between the actual and the budgeted
values are established, there is a need to take corrective action.
 Sales Control Methods
1. Sales Analysis
2. Marketing Cost Analysis
3. Sales Audit
 Sales Analysis
It is the detailed examination of a company’s sales data and
involves
assimilating, classifying, comparing and drawing conclusions.
Managers use sales analysis to evaluate current performance for
future planning, and to direct the sales effort.
 Elements of Sales Analysis
 Purpose of Evaluation:
a sales manager should decide on the purpose of the evaluation before starting
the analysis.
 Comparison Standards:

a simple sales analysis simply states facts whereas a comparative sales analysis
compares the sales figures with some standards.
 Reporting and Control System :

most companies use sales information systems to store and process data to
generate reports. A sales information system uses mathematical and statistical
procedures to generate reports that depict trends, seasonal patterns, regression
analysis, etc.
 Hierarchical Sales Analysis:

it involves studying the sales performance at a micro level by investigating and

analyzing its components.
 Steps in Sales Analysis
• Determining the Sources of Sales Information: there are many sources
of sales information that includes data from marketing information system,
company records, customers, sales personnel, field visits, and insights of
the manger as well as external sources such as newspaper and magazine
reports, trade journals, etc.
• Collections of Sales Data: the sales data is collected from sales invoices,
historical records of sales volume, customer complaints, bills of sale, cash
registers, etc.
• Processing of Sales Data: most firms use an information system to
capture, store and process the sales data.
• Studying the Results: The result of sales analysis should be carefully
studied to identify the facts and acquire a lead for further analysis.
 Marketing Cost Analysis
It is the analysis of costs that affects sales volume with the
purpose
of determining the profitability of different segment operations. it
is
a managerial tool designed more for use in the planning and
control
of a firm’s future operations. Profitability is determined by sales
volume and its associated costs and expenses.
 Types of Marketing cost Analysis
1. As they appear in the ledger accounts and on the income and
expense statement. (Analysis of Ledger Expenses)

2. After they are grouped into functional categories. (Analysis

of Activity Expenses)

3. After they have been allocated to territories, products, or

other marketing units. (Analysis of Activity Costs by Market
Segments)
 Techniques of Marketing Cost Analysis
1) Classifying Selling Expenses: it requires the classification of
selling expenses as either separable direct) or common (indirect). A
separable expenses is one traceable to individual sales personnel,
sales territories, customers, marketing channels products, or the
like. A common expense is one that is not traceable to specific sales
personnel, sales territories, customers, marketing channels, products
or the like.
2) Converting Accounting Expense Data to Activity Expense
Groups: In this, accounting expense data are converted into activity
expense groups, e.g., all the expenses related to field sales
operations are grouped together (including sales salaries, sales
commissions, sales travel expense, and branch sales office rent) to
determine total expense for this activity.
 Techniques of Marketing Cost
Analysis
3) Bases for Allocating Common Expenses: allocation bases
are factors that measure variability in the activities for
which specific expenses are incurred.
4) Contribution Margin: contribution margin= net sales-cost
of goods sold-(separable expenses + common expenses
allocatable on logical bases).
 Sales Audit
It is a systematic, critical, and unbiased review and
appraisal of the basic objectives and policies of the
selling
function and of the organization, methods, procedures,
and personnel employed to implement those policies
and
achieve those objectives.
 Sales Audit
five main aspects of selling operations:
1) Objectives: each selling input should have clearly stated
objectives, related to desired outputs. For example, a firm
might have the objective of raising its market share from 15
to 20 percent without reducing per unit profit.
2) Policies: Every organization follows certain policies. at the
time of auditing, the practical use of these policies can be
checked.
3) Organization: Auditing may be directed to check
concentration of authority or decentralization, number of
employees in relation to the number of branch offices and
other organizational functions.
 Sales Audit
4) Procedures: the procedures should allocate
responsibility for implementation to particular
individuals and explain how the goals are to be
achieved.
5) Personnel: Authority, responsibility and objectives
of every employee are defined by the organization.
on the basis of the actual performance, their
evaluation can be made possible.